Limiting Damages in Fire Loss Cases with an Enhancement of Damages Defense

WDC Journal Edition: Spring 2009
By: Jesse B. Blocher, Kasdorf, Lewis & Swietlik, S.C.

When defending a client whose alleged negligence causes a fire and results in substantial property damage, asserting and proving an enhancement of damages defense may help to substantially reduce the damages recoverable by the plaintiff. It may also provide a jury with an opportunity to apportion a substantial amount of the damages to the property owner for failure to have adequate safeguards in place to protect the property against fire loss. This defense may be applied when the alleged negligence of a defendant starts a fire at a plaintiff’s property, but the plaintiff’s own failure to implement appropriate fire safety technology to protect the property (such as smoke detectors, sprinkler systems, industrial controls, etc.) exacerbates and worsens the fire damage. An enhancement verdict form, tailored to the facts of a fire loss case, allows the jury to separate those damages caused by the initial negligent act that started the fire from those damages resulting from property owner’s own negligence that caused the fire to spread and increased the damages.[i]

The enhanced injuries doctrine should apply in such cases because the extent of the fire damage was enhanced from its natural course by the property owner’s failure to exercise ordinary care for his own property, to follow trade practice, and/or adhere to building code. The enhanced injuries doctrine was first applied in Wisconsin in Butzow v. Wausau Memorial Hospital. [ii] In Butzow, the Supreme Court held that a negligent doctor, who aggravates a pre-existing injury, is liable for damage caused by the aggravation.[iii] The enhanced injuries doctrine evolved from this case, and has been applied both by plaintiffs and defendants in many different contexts. For example, a plaintiff who was a passenger in a vehicle that collided with a tree was allowed to maintain a suit against an automobile company for a defectively designed seat, which caused damage beyond the expected result of the collision.[iv] Similarly, a farmer was entitled to bring a suit against a manufacturer of a tractor when the absence of a shut-off device greatly enhanced the injuries he sustained in an accident.[v]

The enhanced injury doctrine has also been applied by defendants when a plaintiff’s failure to exercise due care for his own safety contributed to and enhanced his damages. For example, an automobile occupant who does not wear his seat belt is liable for damages flowing from or enhanced by the failure to wear the seat belt.[vi] Similarly, courts have applied the enhanced injury doctrine to riders of ATV vehicles not wearing helmets to reduce damages caused by the failure to do so.[vii]

The enhanced injury doctrine is not limited to simply those specific fact patterns described in the above cases. The Farrell court, at the time, applied the enhanced injury doctrine to a new factual situation and indicted that the enhanced injury doctrine generally applies to tortuous conduct that causes or contributes to damages claimed notwithstanding the specific facts.[viii]

An enhancement theory has been applied by defendants in other jurisdictions in fire loss cases. For example, in East Hampton Dewitt Corp. v. Rosen,[ix] the Second Circuit determined that a property owner’s faulty construction of a building, which allegedly contributed to the spread of a fire caused by a building tenant, was properly at issue.[x] The court relied on the long-standing general rule that every party has a duty to minimize its damages:

The rule is of general and widespread application that one who has been injured either in his person or his property by the wrongful act or default of another is under an obligatory duty to make a reasonable effort to minimize the damages liable to result from such injury, and that if he does not make such reasonable effort he will be debarred from recovering for those additional damages which result from such failure.[xi]

The court further explained the policy behind such a rule:

The social policy behind this is evident. Whatever considerations justify imposition of the liability for harm negligently caused by a defendant, these do not extend to damages the plaintiff could reasonably have avoided. A rule denying compensation for such damages supposedly promotes careful conduct by plaintiffs just as the imposition of liability for consequences unavoidable by plaintiffs supposedly promotes such conduct by defendants. From the standpoint of risk sharing, plaintiffs at least in a situation such as that hypothesized, can insure against loss from their negligence as well as can defendants.[xii]

The court determined that this principle applied equally to plaintiffs’ conduct occurring before as well as after the defendants’ alleged negligent act.[xiii] The court concluded “that no social end is served by mulcting a defendant for damage a plaintiff could reasonably have prevented . . . .”[xiv]

Application of the enhanced injury doctrine in fire loss cases is in accord with Wisconsin’s long-standing principle that “[e]very person has a duty to use ordinary care in all of his or her activities, and a person is negligent when that person fails to exercise ordinary care. . . . Under the general framework governing the duty of care, a ‘person is not using ordinary care and is negligent, if the person, without intending to do harm does something (or fails to do something) that a reasonable person would recognize as creating an unreasonable risk of injury or damage to a person or property.’”[xv] The duty of care applies regardless of the fact pattern.

The Wisconsin Supreme Court has already determined that a jury may consider a plaintiff’s negligence for failing to have appropriate fire safeguards in place to prevent the spread of fire.[xvi] Specifically, the Wisconsin Supreme Court upheld as appropriate the following jury instruction:

"Every person in all situations has a duty to exercise ordinary care for the safety of his property. This does not mean that he is required at all hazards to avoid injury to his property; he must, however, exercise ordinary care to take precautions to avoid injury to his property from fire. . . . That duty includes the appreciation of danger of fire. Such a person has a duty to exercise ordinary care to provide for his own protection and safety such fire protection and extinguishing devices and equipment and such training of his employees in the use of fire prevention procedures and fire protection and extinguishing devices and to construct and maintain his premises to guard against the prospect of fire and the damage resulting therefrom as a reasonably prudent person would under the same or similar circumstances.[xvii]

The court agreed that the appropriate focus for the jury to consider is what caused the fire damages in question, not what caused the start of the fire.[xviii] The court also indicated that the jury may consider the distinction between the cause of the origin of the fire and the cause of the spread of the fire.[xix]

Similarly, in other jurisdictions, Courts have recognized that there is an important distinction between the cause of the fire starting and the cause of the fire spreading. For example, a trial court in Florida committed reversible error by dismissing an architectural firm from a case that did not cause a building fire, when there was a question as to whether the negligence of the architectural firm caused and increased the spread of the fire.[xx] Similarly, when a fire was started on a building owner’s premises by no fault of the building owner, but failure to comply with code provisions caused the fire to spread, the owner of the building was liable for the resulting damages.[xxi] Also, in products liability cases, the failure to have adequate safeguards to protect against fire can be the basis for enhanced damages attributed to a manufacturer.[xxii] In addition, courts in many jurisdictions have generally held that a plaintiffs’ failure to have adequate precautions in place to curtail the spread of fire is a defense in an action alleging negligence in starting a fire.[xxiii]

Therefore, the enhancement theory can be applied to reduce a plaintiff’s alleged damages when the spread of the fire is caused by a plaintiff’s negligence in failing to have appropriate fire protection and suppression technologies in place. An enhancement verdict gives the jury an appropriate and logical mechanism for separating fire damages that could have been avoided through the use of appropriate fire safeguards. Application of the doctrine appropriately limits the tortfeasor’s liability to fire damages caused by his or her alleged actions, while apportioning damages to the plaintiff for causing the spread of the fire and increasing the overall property damages.

In some instances, plaintiffs may attempt to escape the negligence comparison by pursuing their claims as a breach of contract, rather than ordinary negligence. For example, if a service contractor’s negligence starts a fire, a plaintiff may have negligence and a breach of contract claim. Application of the enhancement theory should also apply to damages claimed as a result of an alleged breach of contract.

The enhanced injury doctrine should apply to claims sounding in contract and tort because it has been applied as a rule of damages, rather than one of liability, in jurisdictions across the country.[xxiv] “Generally, one who is injured by the wrongful or negligent act of another, whether by tort or breach of contract, is bound to exercise reasonable care and diligence to avoid loss or minimize or lessen resulting damage, and to the extent that his damages are the result of his active and unreasonable enhancement thereof, or due to his failure to exercise such care and diligence, he cannot recover.”[xxv] This principle is consistent with Wisconsin law: “A party alleging breach of the contract has a duty to mitigate damages, that is, ‘to use reasonable means under the circumstances to avoid or minimize the damages.’ . . . An injured party cannot recover any item of damage that could have been, or was, avoided.”[xxvi]

In contrast to damages awarded in tort actions, contract damages are “limited by the rule that only such damages are recoverable as are the natural and probable consequence of the breach . . . . [L]iability is only for such damages as are the natural and probable consequence of the breach and such as were within the contemplation of the parties.”[xxvii] So while a comparison of fault is typically not included in a breach of contract special verdict, the breaching party is still only liable for the harm that he causes, not damages that result from the non-breaching party’s own acts.[xxviii] In enhanced fire damages cases, all of the fire damages do not naturally flow from the breach of contract, some or most of the fire damages naturally flow from plaintiff’s own failure to take appropriate fire safety precautions.

Therefore, the enhancement theory should apply to claims of breach of contract in fire loss cases as well as negligence claims. The enhancement theory is properly applied in fire loss cases as a rule of damages to limit the exposure of a defendant who starts a fire to those damages that are the natural result of the defendant’s conduct and not additional fire loss that should have been prevented by the property owner.[xxix]

[i] See, e.g., WIS JI-CIVIL 1723.

[ii] 51 Wis. 2d 281, 187 N.W.2d 349 (1971).

[iii] Id. at 287-88.

[iv] Sumnicht v. Toyota Motor Sales, Inc., 121 Wis. 2d 338, 351-52, 360 N.W.2d 2 (1984); see also, Maskrey v. Volkswagenwerk Aktiengesellschaft, 125 Wis. 2d 145, 158, 370 N.W.2d 815 (Ct. App. 1985).

[v] Farrell v. John Deere Co., 151 Wis. 2d 45, 55, 443 N.W.2d 50 (Ct. App. 1989); see also, Hansen v. New Holland North America, Inc., 215 Wis. 2d 655, 662, 574 N.W.2d 250 (Ct. App. 1997).

[vi] Foley v. West Allis, 113 Wis. 2d 475, 483-85, 335 N.W.2d 824 (1983) (overruled on other grounds).

[vii] Stehik v. Rhoads, 2002 WI 73, ¶¶ 5-10, 253 Wis. 2d 477, 645 N.W.2d 889 (nullified by Wis. Stat. § 895.049).

[viii] 151 Wis. 2d at 55.

[ix] 490 F. 2d 1234 (2d Cir. 1973).

[x] Id. at 1240.

[xi] Id.

[xii] Id.

[xiii] Id. This is an important distinction because normally a plaintiff’s duty to mitigate damages only arises after the defendant’s alleged negligence occurs.

[xiv] Id.

[xv] Alvarado v. Sersch, 2003 WI 55, ¶ 14, 262 Wis. 2d 74, 662 N.W.2d 350.

[xvi] Meurer v. ITT General Controls, 90 Wis. 2d 438, 446-47, 280 N.W.2d 156 (1979).

[xvii] Id.

[xviii] Id. at 446.

[xix] Id. at 449.

[xx] Sehlke v. Montwood Inc., 477 So. 2d 668, 669 (Ct. App. Fla. 1985).

[xxi] Concord Florida, Inc. v. Lewin, 341 So. 2d 242, 244-45 (Ct. App. Fla. 1976); see also Mozer v. Drutzrovsky, 177 So. 2d 880, 882-83 (Ct. App. Fla. 1965).

[xxii] Meil v. Piper Aircraft Corp., 658 F. 2d 787, 789-80 (10th 1981).

[xxiii] Butler v. Pittwai Corp., 770 F. 2d 7, 9 (2d Cir. 1985) (holding that a smoke detector manufacturer can be held liable for personal injuries suffered in fire because the detector failed to sound in a timely fashion); Laaperi v. Sears, 787 F. 2d 726, 729 (1st Cir. 1986); Thompson v. Southwestern Bell Tel. Co., 451 S.W. 2d 147, 150-51 (Missou. 1970) (failure to have a required fire extinguisher could be basis for liability for causing the spread of fire); Custom Craft Tile, Inc. v. Engineered Lubricants Co., 664 S.W. 2d 556 (Missou. Ct. App. 1983) (holding that a defendant’s failure to guard against fire threatening flammable contents of its building can be the basis for negligence and that “a defendant may be held liable for the spread of fire caused by the premises being maintained in a negligent condition”); Centennial Ins. Co. v. Hing Fa, Inc., 754 N.Y.S. 2d 4, 5 (N.Y. App. Div. 2003) (failing to comply with fire department requirement to disconnect duct work could potentially be the basis for liability based on fire spreading); Taie v. Hilton Hotels Corp., 520 N.Y.S. 2d 776, 777-78 (N.Y. App. Div. 1987) (an inadequate fire emergency plan could be the basis for hotel’s negligence in protecting patrons from fire).

[xxiv] See D’Amario v. The Ford Motor Co., 806 So. 2d 424, 432-33 (S.C. Fla. 2001) (discussing the differences in application of the enhanced injury/crashworthiness doctrine across various jurisdictions and indicating that all approaches seek to apportion the injuries and damages arising from the alleged incident and enhancement).

[xxv] Cook & Nichols, Inc. v. Peat, Marwick, Mitchell & Co., 480 S.W. 2d 542, 546 (Tenn. Ct. App. 1971).

[xxvi] Kramer v. Bd. of Educ., 2001 WI App. 244 ¶ 13, 248 Wis. 2d 333, 635 N.W.2d 857.

[xxvii] Thurner Heat Treating Co. v. Memco, Inc., 252 Wis. 16, 25, 30 N.W.2d 228 (1947); Wis. JI – Civil 3710.

[xxviii] See Outboard Marine Corp. v. Babcock Industries, Inc., 106 F. 3d 182, 185 (7th Cir. 1997).

[xxix] Kasdorf, Lewis & Swietlik, S.C., and WDC members, James J. Kriva and Jesse B. Blocher, successfully applied this enhancement theory at trial in Kenosha County Case Number 07-CV-0213 to drastically reduce the multi-million dollar fine damages claimed by the plaintiff against a service contractor that allegedly started a fire while repairing industrial machinery.